Exhibit 99.1
NEWS RELEASE
FOR FURTHER INFORMATION CONTACT:
Stephen M. Merrick Executive Vice President (847) 382-1000 | Catherine E. Lawler Investor Relations (847) 671-1177 |
CTI Industries Corporation Reports
2007 Financial Results
FOR IMMEDIATE RELEASE
March 31, 2008
BARRINGTON, IL, March 31, 2008 -- CTI Industries Corporation (NASDAQ Capital Market), a manufacturer and marketer of novelty balloons, printed and laminated films and flexible packaging and storage products, today announced its full-year results of operations for 2007, as well as for the three months ended December 31, 2007.
Year End Results
For the year ended December 31, 2007, consolidated net sales totaled $36,510,000 compared to consolidated net sales of $35,428,000 for the year ended December 31, 2006, an increase of 3%. For the year, CTI achieved net income of $82,000 or $0.03 per share (basic and diluted). During the year ended December 31, 2006, CTI had net income of $1,895,000 or $0.91 per share (basic) and $0.85 per share (diluted). CTI’s net income for 2006 included net income before taxes of $1,122,000 and an income tax benefit of $774,000. Absent the income tax benefit, CTI’s earnings per share for 2006 were $0.54 (basic) and $0.50 (diluted).
Fourth Quarter Results
Consolidated net sales for the fourth quarter of 2007 were $10,299,000 compared to consolidated net sales of $9,672,000 for the fourth quarter of 2006, an increase of 6.5%. CTI had net income of $125,000 or $0.05 per share (basic and diluted) for the fourth quarter of 2007 compared to net income of $1,154,000 or $0.54 per share (basic) and $0.49 per share (diluted) for the fourth quarter of 2005. CTI’s income for the fourth quarter of 2006 included a tax benefit of $834,000. Absent the tax benefit, CTI’s earnings for the fourth quarter 2006 were $319,000.
Key Factors and Trends
During 2007, CTI experienced a modest increase in revenues of 3% over 2006 revenues. During 2007, sales of pouches increased by $1,900,000, an increase of 60% over 2006 levels. These increased levels of pouch sales did not include revenues from CTI’s new supply arrangement made in January 2008. Revenues from the sale of novelty items and films in 2007 declined by about $850,000 from 2006 levels, or about 2.6%.
Gross margins declined from 25.1% in 2006 to 23.8% in 2007. This decline was the result of (i) changes in the mix of products sold, (ii) increases in the costs of raw materials, (iii) increases in direct labor rates and (iv) production costs associated with the set-up, testing and initial production of pouch production lines.
Gross margin rates and net income were affected by production costs incurred by the Company during 2007 related to the set-up, testing and initial production of pouch production lines. We estimate that the total of such expenses during the year was approximately $1,709,000 of which $1,121,000 was capitalized.
CTI Industries Corporation, based in suburban Chicago, designs, develops, produces and markets a line of novelty balloon products, laminated and printed films for packaging applications and flexible packaging and storage products.
Statements made in this release that are not historical facts are “forward-looking” statement (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties and are subject to change at any time. These “forward-looking” statements may include, but are not limited to, statements containing words such as “may,” “should,” “could,” “would,” “expect,” “plan,” “goal,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or similar expressions. Factors that could cause results to differ are identified in the public filings of the Company with the Securities and Exchange Commission. More information on factors that could affect CTI’s business and financial results are included in its public filings made with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
- FINANCIAL HIGHLIGHTS FOLLOW -
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Consolidated Statements of Operations | |||||||||||||
Year ended December 31, | Three months ended December 31, | ||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||
Net sales | $ | 36,509,710 | $ | 35,428,155 | $ | 10,299,283 | $ | 9,672,264 | |||||
Cost of sales | 27,825,493 | 26,531,045 | 7,879,631 | 7,178,443 | |||||||||
Gross profit | 8,684,217 | 8,897,110 | 2,419,652 | 2,493,821 | |||||||||
Operating expenses: | |||||||||||||
General and administrative | 5,211,470 | 4,554,324 | 1,288,897 | 1,228,787 | |||||||||
Selling | 753,571 | 847,244 | 161,277 | 222,912 | |||||||||
Advertising and marketing | 1,474,289 | 1,200,782 | 461,428 | 354,551 | |||||||||
Loss on sale of assets | - | 144,936 | - | 2,959 | |||||||||
Other (income) | - | (471,802 | ) | - | (11,507 | ) | |||||||
Asset Impairment Loss | - | - | |||||||||||
Total operating expenses | 7,439,330 | 6,275,484 | 1,911,602 | 1,797,702 | |||||||||
Income from operations | 1,244,887 | 2,621,626 | 508,050 | 696,119 | |||||||||
Other income (expense): | |||||||||||||
Interest expense | (1,285,964 | ) | (1,690,825 | ) | (309,637 | ) | (414,311 | ) | |||||
Other | 173,510 | 191,270 | 8,028 | 36,888 | |||||||||
Total other expense | (1,112,454 | ) | (1,499,555 | ) | (301,609 | ) | (377,423 | ) | |||||
Income before income taxes and minority interest | 132,433 | 1,122,071 | 206,441 | 318,696 | |||||||||
Income tax expense (benefit) | 50,673 | (774,195 | ) | 81,726 | (833,525 | ) | |||||||
Income before minority interest | 81,760 | 1,896,266 | 124,715 | 1,152,221 | |||||||||
Minority interest in (loss) income of subsidiary | (138 | ) | 1,517 | (35 | ) | (1,597 | ) | ||||||
Net income | $ | 81,898 | $ | 1,894,749 | $ | 124,750 | $ | 1,153,818 | |||||
Income applicable to common shares | $ | 81,898 | $ | 1,894,749 | $ | 124,750 | $ | 1,153,818 | |||||
Basic income per common share | $ | 0.03 | $ | 0.91 | $ | 0.05 | $ | 0.54 | |||||
Diluted income per common share | $ | 0.03 | $ | 0.85 | $ | 0.05 | $ | 0.49 | |||||
Weighted average number of shares and | |||||||||||||
equivalent shares of common stock outstanding: | |||||||||||||
Basic | 2,346,126 | 2,087,145 | 2,555,580 | 2,134,462 | |||||||||
Diluted | 2,589,960 | 2,234,901 | 2,648,434 | 2,373,471 |
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